CONFORMING AMENDMENTS TO OTHER ISAs
Note: The following are conforming amendments to other ISAs as a result of the new and revised auditor
reporting ISAs. These amendments will become effective at the same time as the new and revised auditor
reporting ISAs. The footnote numbers within these amendments do not align with the ISAs that are
amended, and reference should be made to those ISAs.
ISA 210, Agreeing the Terms of Audit Engagements
Requirements
Agreement on Audit Engagement Terms
10.
Subject to paragraph 11, the agreed terms of the audit engagement shall be recorded in an audit
engagement letter or other suitable form of written agreement and shall include: (Ref: Para. A22–
A25)
(a)
The objective and scope of the audit of the financial statements;
(b)
The responsibilities of the auditor;
(c)
The responsibilities of management;
(d)
Identification of the applicable financial reporting framework for the preparation of the financial
statements; and
(e)
Reference to the expected form and content of any reports to be issued by the auditor; and
(Ref: Para. A23a)
(f)
A statement that there may be circumstances in which a report may differ from its expected
form and content.
Application and Other Explanatory Material
Audit Engagement Letter or Other Form of Written Agreement (Ref: Para. 10–11)
Form and Content of the Audit Engagement Letter
A23. The form and content of the audit engagement letter may vary for each entity. Information included
in the audit engagement letter on the auditor’s responsibilities may be based on ISA 200.
Paragraphs 6(b) and 12 of this ISA deal with the description of the responsibilities of management.
In addition to including the matters required by paragraph 10, an audit engagement letter may
make reference to, for example:
•
Elaboration of the scope of the audit, including reference to applicable legislation,
regulations, ISAs, and ethical and other pronouncements of professional bodies to which the
auditor adheres.
•
The form of any other communication of results of the audit engagement.
CONFORMING AMENDMENTS TO OTHER ISAs
•
The requirement for the auditor to communicate key audit matters in the auditor’s report in
1
accordance with ISA 701.
•
The fact that because of the inherent limitations of an audit, together with the inherent
limitations of internal control, there is an unavoidable risk that some material misstatements
may not be detected, even though the audit is properly planned and performed in accordance
with ISAs.
•
Arrangements regarding the planning and performance of the audit, including the
composition of the engagement team.
•
The expectation that management will provide written representations (see also paragraph
A13).
•
The agreement of management to make available to the auditor draft financial statements
and any accompanying other information in time to allow the auditor to complete the audit in
accordance with the proposed timetable.
•
The agreement of management to inform the auditor of facts that may affect the financial
statements, of which management may become aware during the period from the date of the
auditor’s report to the date the financial statements are issued.
•
The basis on which fees are computed and any billing arrangements.
•
A request for management to acknowledge receipt of the audit engagement letter and to
agree to the terms of the engagement outlined therein.
A23a. When the auditor is not required to communicate key audit matters, it may be helpful for the auditor
to make reference in the terms of the audit engagement to the possibility of communicating key
audit matters in the auditor’s report and, in certain jurisdictions, it may be necessary for the auditor
to include a reference to such possibility in order to retain the ability to do so.
A24. When relevant, the following points could also be made in the audit engagement letter:
•
Arrangements concerning the involvement of other auditors and experts in some aspects of
the audit.
•
Arrangements concerning the involvement of internal auditors and other staff of the entity.
•
Arrangements to be made with the predecessor auditor, if any, in the case of an initial audit.
•
Any restriction of the auditor’s liability when such possibility exists.
•
A reference to any further agreements between the auditor and the entity.
•
Any obligations to provide audit working papers to other parties.
An example of an audit engagement letter is set out in Appendix 1.
***
1
ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
Appendix 1
Example of an Audit Engagement Letter
The following is an example of an audit engagement letter for an audit of general purpose financial
statements prepared in accordance with International Financial Reporting Standards. This letter is not
authoritative but is intended only to be a guide that may be used in conjunction with the considerations
outlined in this ISA. It will need to be varied according to individual requirements and circumstances. It is
drafted to refer to the audit of financial statements for a single reporting period and would require adaptation
if intended or expected to apply to recurring audits (see paragraph 13 of this ISA). It may be appropriate to
seek legal advice that any proposed letter is suitable.
***
To the appropriate representative of management or those charged with governance of ABC Company:
1
[The objective and scope of the audit]
2
You have requested that we audit the financial statements of ABC Company, which comprise the balance
sheet statement of financial position as at December 31, 20X1, and the income statement of comprehensive
income, statement of changes in equity and statement of cash flows statement for the year then ended, and
notes to the financial statements, including a summary of significant accounting policies and other
explanatory information. We are pleased to confirm our acceptance and our understanding of this audit
engagement by means of this letter.
Our audit will be conducted with tThe objectives of our audit are to obtain reasonable assurance about
whether the financial statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our expressing an opinion on the financial statements.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with International Standards on Auditing (ISAs) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
1
The addressees and references in the letter would be those that are appropriate in the circumstances of the engagement, including
the relevant jurisdiction. It is important to refer to the appropriate persons – see paragraph A21.
2
Throughout this letter, references to “you,” “we,” “us,” “management,” “those charged with governance” and “auditor” would be
used or amended as appropriate in the circumstances.
CONFORMING AMENDMENTS TO OTHER ISAs
[The responsibilities of the auditor]
We will conduct our audit in accordance with International Standards on Auditing (ISAs). Those standards
require that we comply with ethical requirements. and As part of an audit in accordance with ISAs, we
exercise professional judgment and maintain professional skepticism throughout the planning and
performing of the audit to obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit also involves We also:
•
performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment
of Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
•
In making our risk assessments, we Obtain an understanding of consider internal control relevant to
the entity’s preparation of the financial statements audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
3
effectiveness of the entity’s internal control. However, we will communicate to you in writing
concerning any significant deficiencies in internal control relevant to the audit of the financial
statements that we have identified during the audit.
•
An audit also includes evaluating Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by management., as well as
•
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
•
evaluating Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Because of the inherent limitations of an audit, together with the inherent limitations of internal control,
there is an unavoidable risk that some material misstatements may not be detected, even though the
audit is properly planned and performed in accordance with ISAs.
3
This sentence would be modified, as appropriate, in circumstances when the auditor also has responsibility to issue an opinion
on the effectiveness of internal control in conjunction with the audit of the financial statements.
CONFORMING AMENDMENTS TO OTHER ISAs
[The responsibilities of management and identification of the applicable financial reporting framework (for
purposes of this example it is assumed that the auditor has not determined that the law or regulation
prescribes those responsibilities in appropriate terms; the descriptions in paragraph 6(b) of this ISA are
therefore used).]
Our audit will be conducted on the basis that [management and, where appropriate, those charged with
4
governance] acknowledge and understand that they have responsibility:
(a)
For the preparation and fair presentation of the financial statements in accordance with
5
International Financial Reporting Standards;
(b)
For such internal control as [management] determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error;
(c)
To provide us with:
(i)
Access to all information of which [management] is aware that is relevant to the preparation
of the financial statements such as records, documentation and other matters;
(ii)
Additional information that we may request from [management] for the purpose of the audit;
and
(iii)
Unrestricted access to persons within the entity from whom we determine it necessary to
obtain audit evidence.
As part of our audit process, we will request from [management and, where appropriate, those charged
with governance], written confirmation concerning representations made to us in connection with the
audit.
We look forward to full cooperation from your staff during our audit.
[Other relevant information]
[Insert other information, such as fee arrangements, billings and other specific terms, as appropriate.]
[Reporting]
[Insert appropriate reference to the expected form and content of the auditor’s report.]
The form and content of our report may need to be amended in the light of our audit findings.
Please sign and return the attached copy of this letter to indicate your acknowledgement of, and
agreement with, the arrangements for our audit of the financial statements including our respective
responsibilities.
XYZ & Co.
4
Use terminology as appropriate in the circumstances.
5
Or, if appropriate, “For the preparation of financial statements that give a true and fair view in accordance with International
Financial Reporting Standards”
CONFORMING AMENDMENTS TO OTHER ISAs
Acknowledged and agreed on behalf of ABC Company by
(signed)
......................
Name and Title
Date
ISA 220, Quality Control for an Audit of Financial Statements
Requirements
Engagement Performance
Engagement Quality Control Review
…
20.
21.
The engagement quality control reviewer shall perform an objective evaluation of the significant
judgments made by the engagement team, and the conclusions reached in formulating the auditor’s
report. This evaluation shall involve:
(a)
Discussion of significant matters with the engagement partner;
(b)
Review of the financial statements and the proposed auditor’s report;
(c)
Review of selected audit documentation relating to the significant judgments the engagement
team made and the conclusions it reached; and
(d)
Evaluation of the conclusions reached in formulating the auditor’s report and consideration of
whether the proposed auditor’s report is appropriate. (Ref: Para. A26–A27a, A29–A31)
For audits of financial statements of listed entities, the engagement quality control reviewer, on
performing an engagement quality control review, shall also consider the following:
(a)
The engagement team’s evaluation of the firm’s independence in relation to the audit
engagement;
(b)
Whether appropriate consultation has taken place on matters involving differences of opinion
or other difficult or contentious matters, and the conclusions arising from those consultations;
and
(c)
Whether audit documentation selected for review reflects the work performed in relation to
the significant judgments and supports the conclusions reached. (Ref: Para. A28–A31)
…
Application and Other Explanatory Material
Engagement Performance
Engagement Quality Control Review
…
Nature, Timing and Extent of Engagement Quality Control Review (Ref: Para. 20)
CONFORMING AMENDMENTS TO OTHER ISAs
A26. Remaining alert for changes in circumstances allows the engagement partner to identify situations in
which an engagement quality control review is necessary, even though at the start of the engagement,
such a review was not required.
A27. The extent of the engagement quality control review may depend, among other things, on the
complexity of the audit engagement, whether the entity is a listed entity, and the risk that the
auditor’s report might not be appropriate in the circumstances. The performance of an engagement
quality control review does not reduce the responsibilities of the engagement partner for the audit
engagement and its performance.
6
A27a. When ISA 701 applies, the conclusions reached by the engagement team in formulating the
auditor’s report include determining:
•
The key audit matters to be included in the auditor’s report;
•
The key audit matters that will not be communicated in the auditor’s report in accordance with
paragraph 14 of ISA 701, if any; and
•
If applicable, depending on the facts and circumstances of the entity and the audit, that there
are no key audit matters to communicate in the auditor’s report.
In addition, the review of the proposed auditor’s report in accordance with paragraph 20(b) includes
consideration of the proposed wording to be included in the Key Audit Matters section.
Engagement Quality Control Review of Listed Entities (Ref: Para. 21)
A28. Other matters relevant to evaluating the significant judgments made by the engagement team that
may be considered in an engagement quality control review of a listed entity include:
•
Significant risks identified during the engagement in accordance with ISA 315 (Revised), and
8
the responses to those risks in accordance with ISA 330, including the engagement team’s
9
assessment of, and response to, the risk of fraud in accordance with ISA 240.
•
Judgments made, particularly with respect to materiality and significant risks.
•
The significance and disposition of corrected and uncorrected misstatements identified during the
audit.
•
The matters to be communicated to management and those charged with governance and,
where applicable, other parties such as regulatory bodies.
7
These other matters, depending on the circumstances, may also be applicable for engagement quality
control reviews for audits of financial statements of other entities.
6
ISA 701, Communicating Key Audit Matters in the Auditor’s Report
7
ISA 315 (Revised), Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its
Environment
8
ISA 330, The Auditor’s Responses to Assessed Risks
9
ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements
CONFORMING AMENDMENTS TO OTHER ISAs
Considerations Specific to Smaller Entities (Ref: Para. 20–21)
A29. In addition to the audits of financial statements of listed entities, an engagement quality control review is
required for audit engagements that meet the criteria established by the firm that subjects engagements
to an engagement quality control review. In some cases, none of the firm’s audit engagements may
meet the criteria that would subject them to such a review.
Considerations Specific to Public Sector Entities (Ref: Para. 20–21)
A30. In the public sector, a statutorily appointed auditor (for example, an Auditor General, or other suitably
qualified person appointed on behalf of the Auditor General), may act in a role equivalent to that of
engagement partner with overall responsibility for public sector audits. In such circumstances, where
applicable, the selection of the engagement quality control reviewer includes consideration of the need
for independence from the audited entity and the ability of the engagement quality control reviewer to
provide an objective evaluation.
A31. Listed entities as referred to in paragraphs 21 and A28 are not common in the public sector.
However, there may be other public sector entities that are significant due to size, complexity or
public interest aspects, and which consequently have a wide range of stakeholders. Examples
include state owned corporations and public utilities. Ongoing transformations within the public
sector may also give rise to new types of significant entities. There are no fixed objective criteria on
which the determination of significance is based. Nonetheless, public sector auditors evaluate
which entities may be of sufficient significance to warrant performance of an engagement quality
control review.
ISA 230, Audit Documentation
Note: When the ISAs were clarified, all of them had the same effective date. Now that some of the ISAs
(new or revised auditor reporting standards) have a different effective date, the phase “in effect for
audits of financial statements in effect for audits of financial statements for periods beginning on or
after December 15, 2009…” will be deleted in the appendix to ISA 230.
Application and Other Explanatory Material
Documentation of the Audit Procedures Performed and Audit Evidence Obtained
Form, Content and Extent of Audit Documentation
Documentation of Significant Matters and Related Significant Professional Judgments (Ref: Para. 8(c))
A10. Some examples of circumstances in which, in accordance with paragraph 8, it is appropriate to
prepare audit documentation relating to the use of professional judgment include, where the
matters and judgments are significant:
•
The rationale for the auditor’s conclusion when a requirement provides that the auditor “shall
consider” certain information or factors, and that consideration is significant in the context of
the particular engagement.
•
The basis for the auditor’s conclusion on the reasonableness of areas of subjective
judgments (for example, the reasonableness of significant accounting estimates).
•
The basis for the auditor’s conclusions about the authenticity of a document when further
investigation (such as making appropriate use of an expert or of confirmation procedures) is
CONFORMING AMENDMENTS TO OTHER ISAs
undertaken in response to conditions identified during the audit that caused the auditor to
believe that the document may not be authentic.
•
10
10
When ISA 701 applies, the auditor’s determination of the key audit matters or the
determination that there are no key audit matters to be communicated.
ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
ISA 510, Initial Audit Engagements—Opening Balances
Appendix
(Ref: Para. A8)
Illustrations of Auditors’s Reports with Modified Opinions
Note: Throughout these illustrative auditor’s reports, the Opinion section has been positioned first in
accordance with ISA 700 (Revised), and the Basis for Opinion section is positioned immediately
after the Opinion section. Also, the first and last sentence that was included in the extant auditor’s
responsibilities section is now subsumed as part of the new Basis for Opinion section.
Illustration 1:
For purposes of this illustrative auditor’s report, the following Ccircumstances described in paragraph
8(a) include the following are assumed:
•
Audit of a complete set of financial statements of an entity other than a listed entity using a fair
1
presentation framework. The audit is not a group audit (i.e., ISA 600 does not apply).
•
The financial statements are prepared by management of the entity in accordance with
International Financial Reporting Standards (IFRSs) (a general purpose framework).
•
The terms of the audit engagement reflect the description of management’s responsibility for the
2
financial statements in ISA 210.
•
The auditor did not observe the counting of the physical inventory at the beginning of the current
period and was unable to obtain sufficient appropriate audit evidence regarding the opening
balances of inventory.
•
The possible effects of the inability to obtain sufficient appropriate audit evidence regarding
opening balances of inventory are deemed to be material but not pervasive to the entity’s
3
financial performance and cash flows.
•
The financial position at year end is fairly presented.
•
In this particular jurisdiction, law and regulation prohibit the auditor from giving an opinion which
is qualified regarding the financial performance and cash flows and unmodified regarding
financial position.
•
The relevant ethical requirements that apply to the audit are those of the jurisdiction.
•
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does
not exist related to events or conditions that may cast significant doubt on the entity’s ability to
4
continue as a going concern in accordance with ISA 570 (Revised).
1
2
ISA 600, Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors)
ISA 210, Agreeing the Terms of Audit Engagements
3
If the possible effects, in the auditor’s judgment, are considered to be material and pervasive to the entity’s financial
performance and cash flows, the auditor would disclaim an opinion on the financial performance and cash flows.
4
ISA 570 (Revised), Going Concern
CONFORMING AMENDMENTS TO OTHER ISAs
•
The auditor is not required, and has otherwise not decided, to communicate key audit matters in
5
accordance with ISA 701.
•
Corresponding figures are presented, and the prior period’s financial statements were audited by
a predecessor auditor. The auditor is not prohibited by law or regulation from referring to the
predecessor auditor’s report on the corresponding figures and has decided to do so.
•
Those responsible for oversight of the financial statements differ from those responsible for the
preparation of the financial statements.
•
In addition to the audit of the financial statements, the auditor has other reporting responsibilities
required under local law.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Report on the Audit of the Financial Statements 6
Qualified Opinion
We have audited the accompanying financial statements of ABC Company
comprise the statement of financial position as at December 31, 20X1,
comprehensive income, statement of changes in equity and statement of cash
ended, and notes to the financial statements, including a summary of significant
other explanatory information.
(the Company), which
and the statement of
flows for the year then
accounting policies and
In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion
section of our report paragraph, the accompanying financial statements present fairly, in all material
respects, (or give a true and fair view of) the financial position of ABC the Company as at December 31,
20X1, and (of) its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion
We were appointed as auditors of the company on June 30, 20X1 and thus did not observe the counting
of the physical inventories at the beginning of the year. We were unable to satisfy ourselves by
alternative means concerning inventory quantities held at December 31, 20X0. Since opening
inventories enter into the determination of the financial performance and cash flows, we were unable to
determine whether adjustments might have been necessary in respect of the profit for the year reported
in the statement of comprehensive income and the net cash flows from operating activities reported in
the statement of cash flows.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the ethical
5
ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
6
The sub-title “Report on the Audit of the Financial Statements” is unnecessary in circumstances when the second sub-title
“Report on Other Legal and Regulatory Requirements” is not applicable.
CONFORMING AMENDMENTS TO OTHER ISAs
requirements that are relevant to our audit of the financial statements in [jurisdiction], and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Other Matter
The financial statements of the ABC Company for the year ended December 31, 20X0 were audited by
another auditor who expressed an unmodified opinion on those statements on March 31, 20X1.
7
Responsibilities of Management’s and Those Charged with Governance Responsibility for the
8
Financial Statements
9
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
Management is responsible for the preparation and fair presentation of these financial statements in
10
accordance with International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
Auditor’s Responsibility Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
11
preparation and fair presentation of the financial statements in order to design audit procedures that
8
Or other term that is appropriate in the context of the legal framework in the particular jurisdiction
8
Throughout these illustrative auditor’s reports, the Or other terms management and those charged with governance may need
to be replaced by another term that is appropriate in the context of the legal framework in the particular jurisdiction.
9
ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements
10
Where management’s responsibility is to prepare financial statements that give a true and fair view, this may read:
“Management is responsible for the preparation of financial statements that give a true and fair view in accordance with
International Financial Reporting Standards, and for such ...”
11
In the case of footnote 4, this may read: “In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are
CONFORMING AMENDMENTS TO OTHER ISAs
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
12
effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
[Form and content of this section of the auditor’s report will vary depending on the nature of the auditor’s
other reporting responsibilities.]
[Auditor’s sSignature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor’s aAddress]
[Date of the auditor’s report]
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control.”
12
In circumstances when the auditor also has responsibility to express an opinion on the effectiveness of internal control in
conjunction with the audit of the financial statements, this sentence would be worded as follows: “In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances.” In the case of footnote 4, this may
read: “In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.”
CONFORMING AMENDMENTS TO OTHER ISAs
Illustration 2:
For purposes of this illustrative auditor’s report, the following Ccircumstances described in paragraph
A8(b) include the following are assumed:
•
Audit of a complete set of financial statements of an entity other than a listed entity using a fair
presentation framework. The audit is not a group audit (i.e., ISA 600 does not apply).
•
The financial statements are prepared by management of the entity in accordance with IFRSs (a
general purpose framework).
•
The terms of the audit engagement reflect the description of management’s responsibility for the
financial statements in ISA 210.
•
The auditor did not observe the counting of the physical inventory at the beginning of the current
period and was unable to obtain sufficient appropriate audit evidence regarding the opening
balances of inventory.
•
The possible effects of the inability to obtain sufficient appropriate audit evidence regarding
opening balances of inventory are deemed to be material but not pervasive to the entity’s financial
13
performance and cash flows.
•
The financial position at year end is fairly presented.
•
An opinion that is qualified regarding the financial performance and cash flows and unmodified
regarding financial position is considered appropriate in the circumstances.
•
The relevant ethical requirements that apply to the audit are those of the jurisdiction.
•
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does
not exist related to events or conditions that may cast significant doubt on the entity’s ability to
continue as a going concern in accordance with ISA 570 (Revised).
•
The auditor is not required, and has otherwise not decided, to communicate key audit matters in
accordance with ISA 701.
•
Corresponding figures are presented, and the prior period’s financial statements were audited by
a predecessor auditor. The auditor is not prohibited by law or regulation from referring to the
predecessor auditor’s report on the corresponding figures and has decided to do so.
•
Those responsible for oversight of the financial statements differ from those responsible for the
preparation of the financial statements.
•
In addition to the audit of the financial statements, the auditor has other reporting responsibilities
required under local law.
13
If the possible effects, in the auditor’s judgment, are considered to be material and pervasive to the entity’s financial
performance and cash flows, the auditor would disclaim the opinion on the financial performance and cash flows.
CONFORMING AMENDMENTS TO OTHER ISAs
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Report on the Audit of the Financial Statements 14
Opinions
We have audited the accompanying financial statements of ABC Company
comprise the statement of financial position as at December 31, 20X1,
comprehensive income, statement of changes in equity and statement of cash
ended, and notes to the financial statements, including a summary of significant
other explanatory information.
(the Company), which
and the statement of
flows for the year then
accounting policies and
Qualified Opinion on the Financial Performance and Cash Flows
In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion
section of our report paragraph, the accompanying Statement of Comprehensive Income and Statement
of Cash Flows present fairly, in all material respects (or give a true and fair view of), the financial
performance and cash flows of the ABC Company for the year ended December 31, 20X1 in accordance
with International Financial Reporting Standards (IFRSs).
Opinion on the Financial Position
In our opinion, the accompanying statement of financial position presents fairly, in all material respects (or
gives a true and fair view of), the financial position of the Company as at December 31, 20X1 in
accordance with International Financial Reporting Standards IFRSs.
Basis for Opinions, Including Basis for Qualified Opinion on the Financial Performance and Cash
Flows
We were appointed as auditors of the cCompany on June 30, 20X1 and thus did not observe the counting
of the physical inventories at the beginning of the year. We were unable to satisfy ourselves by alternative
means concerning inventory quantities held at December 31, 20X0. Since opening inventories enter into
the determination of the financial performance and cash flows, we were unable to determine whether
adjustments might have been necessary in respect of the profit for the year reported in the statement of
comprehensive income and the net cash flows from operating activities reported in the statement of cash
flows.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in [jurisdiction], and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our unmodified opinion on the financial
position and our qualified audit opinion on the financial performance and cash flows.
14
The sub-title “Report on the Audit of the Financial Statements” is unnecessary in circumstances when the second sub-title
“Report on Other Legal and Regulatory Requirements” is not applicable.
CONFORMING AMENDMENTS TO OTHER ISAs
Other Matter
The financial statements of the ABC Company for the year ended December 31, 20X0 were audited by
another auditor who expressed an unmodified opinion on those statements on March 31, 20X1.
Responsibilities of Management’s
16
Financial Statements
15
and Those Charged with Governance Responsibility for the
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
Management is responsible for the preparation and fair presentation of these financial statements in
17
accordance with International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
Auditor’s Responsibility Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
18
preparation and fair presentation of the financial statements in order to design audit procedures that
16
Or other term that is appropriate in the context of the legal framework in the particular jurisdiction
16
Or other terms that is are appropriate in the context of the legal framework in the particular jurisdiction
17
Where management’s responsibility is to prepare financial statements that give a true and fair view, this may read:
“Management is responsible for the preparation of financial statements that give a true and fair view in accordance with
International Financial Reporting Standards, and for such ...”
18
In the case of footnote 4, this may read: “In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control.”19 In circumstances when the auditor also has responsibility to express an opinion on the effectiveness of internal
control in conjunction with the audit of the financial statements, this sentence would be worded as follows: “In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances.” In the case of footnote 4, this may
read: “In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial
CONFORMING AMENDMENTS TO OTHER ISAs
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
19
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our unmodified opinion on the
financial position and our qualified audit opinion on the financial performance and cash flows.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
[Form and content of this section of the auditor’s report will vary depending on the nature of the auditor’s
other reporting responsibilities.]
[Auditor’s sSignature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor’s aAddress]
[Date of the auditor’s report]
ISA 540, Auditing Accounting Estimates, Including Fair Value Accounting
Estimates, and Related Disclosures
Application and Other Explanatory Material
Further Substantive Procedures to Respond to Significant Risks (Ref: Para. 15)
Recognition and Measurement Criteria
Recognition of the Accounting Estimates in the Financial Statements (Ref: Para. 17(a))
…
A114. With respect to accounting estimates that have not been recognized, the focus of the auditor’s
evaluation is on whether the recognition criteria of the applicable financial reporting framework have
in fact been met. Even where an accounting estimate has not been recognized, and the auditor
concludes that this treatment is appropriate, there may be a need for disclosure of the
circumstances in the notes to the financial statements. Where applicable, Tthe auditor may also
determine that there is a need to draw the reader’s attention to that an accounting estimate that has
been identified as having a high significant estimation uncertainty by adding an Emphasis of Matter
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.”20
ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
19
In circumstances when the auditor also has responsibility to express an opinion on the effectiveness of internal control in
conjunction with the audit of the financial statements, this sentence would be worded as follows: “In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances.” In the case of footnote 4, this may
read: “In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.”20
ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
CONFORMING AMENDMENTS TO OTHER ISAs
paragraph to the auditor’s report.is a key audit matter to be communicated in the auditor’s report in
20
accordance with ISA 701, or may consider it necessary to include an Emphasis of Matter
21
22
paragraph in the auditor’s report (see ISA 706 (Revised). ISA 706 establishes requirements and
provides guidance concerning such paragraphs. If the matter is determined to be a key audit
matter, ISA 706 (Revised) prohibits the auditor from including an Emphasis of Matter paragraph in
23
the auditor’s report.
ISA 580, Written Representations
Note: When the ISAs were clarified, all of them had the same effective date. Now that some of the ISAs
(new or revised auditor reporting standards) have a different effective date, the phase “in effect for
audits of financial statements in effect for audits of financial statements for periods beginning on or
after December 15, 2009…” will be deleted in the appendix to ISA 580.
ISA 600, Special Considerations—Audits of Group Financial Statements
(Including the Work of Component Auditors)
Appendix 1
(Ref: Para. A19)
Illustration of Auditor’s Report Where the Group Engagement Team Is Not Able to
Obtain Sufficient Appropriate Audit Evidence on Which to Base the Group Audit
Opinion
Note: Throughout this illustrative auditor’s report, the Opinion section has been positioned first in
accordance with ISA 700 (Revised), and the Basis for Opinion section is positioned immediately
after the Opinion section. Also, the first and last sentence that was included in the extant auditor’s
responsibilities section is now subsumed as part of the new Basis for Opinion section.
20
ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
21
ISA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report
22
ISA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report
23
ISA 706 (Revised), paragraph 8(b)
CONFORMING AMENDMENTS TO OTHER ISAs
Illustration - Example of a Qualified Opinion Where the Group Engagement Team Is Not Able to Obtain
Sufficient Appropriate Audit Evidence on Which to Base the Group Audit Opinion
For purposes of this illustrative auditor’s report, the following circumstances are assumed:
•
Audit of a complete set of consolidated financial statements of an entity other than a listed entity
using a fair presentation framework. The audit is a group audit (i.e., ISA 600 applies).
•
The consolidated financial statements are prepared by management of the entity in accordance with
IFRSs (a general purpose framework).
•
The terms of the audit engagement reflect the description of management’s responsibility for the
consolidated financial statements in ISA 210.
•
In this example, The group engagement team is unable to obtain sufficient appropriate audit
evidence relating to a significant component accounted for by the equity method (recognized at
$15 million in the statement of financial position, which reflects total assets of $60 million)
because the group engagement team did not have access to the accounting records,
management, or auditor of the component.
•
The group engagement team has read the audited financial statements of the component as at
December 31, 20X1, including the auditor’s report thereon, and considered related financial
information kept by group management in relation to the component.
Example of a Qualified Opinion Where the Group Engagement Team Is Not Able Appropriate Audit
•
In the group engagement partner’s judgment, the effect on the group financial statements of this
1
inability to obtain sufficient appropriate audit evidence is material but not pervasive.
•
The International Ethics Standards Board for Accountants' Code of Ethics for Professional
Accountants comprises all of the relevant ethical requirements that apply to the audit.
•
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty
does not exist related to events or conditions that may cast significant doubt on the entity’s ability
to continue as a going concern in accordance with ISA 570 (Revised).
•
The auditor is not required, and has otherwise not decided, to communicate key audit matters in
accordance with ISA 701.
•
Those responsible for oversight of the consolidated financial statements differ from those responsible
for the preparation of the consolidated financial statements.
•
In addition to the audit of the consolidated financial statements, the auditor has other reporting
responsibilities required under local law.
Evidence on Which to Base the Group Audit Opinion
In this example, the group engagement team is unable to obtain sufficient appropriate audit evidence
relating to a significant component accounted for by the equity method (recognized at $15 million in the
1
If, in the group engagement partner’s judgment, the effect on the group financial statements of the inability to obtain sufficient
appropriate audit evidence is material and pervasive, the group engagement partner would disclaim an opinion in accordance
with ISA 705 (Revised).
CONFORMING AMENDMENTS TO OTHER ISAs
statement of financial position, which reflects total assets of $60 million) because the group engagement
team did not have access to the accounting records, management, or auditor of the component.
The group engagement team has read the audited financial statements of the component as at December
31, 20X1, including the auditor’s report thereon, and considered related financial information kept by
group management in relation to the component.
In the group engagement partner’s judgment, the effect on the group financial statements of this inability
to obtain sufficient appropriate audit evidence is material but not pervasive.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Report on the Audit of the Consolidated Financial Statements 2
Qualified Opinion
We have audited the accompanying consolidated financial statements of ABC Company and its
subsidiaries (the Group), which comprise the consolidated statement of financial position as at December
31, 20X1, and the consolidated statement of comprehensive income, statement of changes in equity and
statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies and other explanatory information.
In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion
section of our report paragraph, the accompanying consolidated financial statements present fairly, in all
material respects (or give a true and fair view of), the financial position of the Group ABC Company and
its subsidiaries as at December 31, 20X1, and (of) their financial performance and cash flows for the year
then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion
ABC Company’s investment in XYZ Company, a foreign associate acquired during the year and
accounted for by the equity method, is carried at $15 million on the consolidated statement of financial
position as at December 31, 20X1, and ABC’s share of XYZ’s net income of $1 million is included in the
consolidated statement of comprehensive income for the year then ended. We were unable to obtain
sufficient appropriate audit evidence about the carrying amount of ABC’s investment in XYZ as at
December 31, 20X1 and ABC’s share of XYZ’s net income for the year because we were denied access
to the financial information, management, and the auditors of XYZ. Consequently, we were unable to
determine whether any adjustments to these amounts were necessary.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA
Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe
2
The sub-title, “Report on the Audit of the Consolidated Financial Statements” is unnecessary in circumstances when the
second sub-title, “Report on Other Legal and Regulatory Requirements” is not applicable.
CONFORMING AMENDMENTS TO OTHER ISAs
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified
audit opinion.
3
Responsibilities of Management’s and Those Charged with Governance Responsibility for the
4
Consolidated Financial Statements
5
[Reporting in accordance with ISA 700 (Revised) – see Illustration 2 in ISA 700 (Revised).]
Management is responsible for the preparation and fair presentation of these consolidated financial
6
statements in accordance with International Financial Reporting Standards, and for such internal control
as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility Responsibilities for the Audit of the Consolidated Financial Statements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 2 in ISA 700 (Revised). The last two
paragraphs which are applicable for audits of listed entities only would not be included.]
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
7
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
8
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
4
Or other term that is appropriate in the context of the legal framework in the particular jurisdiction
4
Throughout these illustrative auditor’s reports, the Or other terms management and those charged with governance may need
to be replaced by another term that is appropriate in the context of the legal framework in the particular jurisdiction.
5
ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements
6
Where management’s responsibility is to prepare consolidated financial statements that give a true and fair view, this may
read: “Management is responsible for the preparation of consolidated financial statements that give a true and fair view in
accordance with International Financial Reporting Standards, and for such ...”7 In the case of footnote 3, this may read: “In
making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated
financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.”
7
In the case of footnote 3, this may read: “In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation of consolidated financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control.”
8
In circumstances when the auditor also has responsibility to express an opinion on the effectiveness of internal control in
conjunction with the audit of the consolidated financial statements, this sentence would be worded as follows: “In making those
risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
CONFORMING AMENDMENTS TO OTHER ISAs
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our qualified audit opinion.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 2 in ISA 700 (Revised).]
[Form and content of this section of the auditor’s report will vary depending on the nature of the auditor’s
other reporting responsibilities.]
[Auditor’s sSignature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor’s aAddress]
[Date of the auditor’s report]
ISA 710, Comparative Information—Corresponding Figures and Comparative
Financial Statements
Requirements
Auditor Reporting
Corresponding Figures
Prior Period Financial Statements Not Audited
14.
If the prior period financial statements were not audited, the auditor shall state in an Other Matter
paragraph in the auditor’s report that the corresponding figures are unaudited. Such a statement
does not, however, relieve the auditor of the requirement to obtain sufficient appropriate audit
evidence that the opening balances do not contain misstatements that materially affect the current
period’s financial statements. (Ref: Para. A7a)
…
Comparative Financial Statements
…
16.
When reporting on prior period financial statements in connection with the current period’s audit, if
the auditor’s opinion on such prior period financial statements differs from the opinion the auditor
previously expressed, the auditor shall disclose the substantive reasons for the different opinion in
an Other Matter paragraph in accordance with ISA 706 (Revised).
consolidated financial statements in order to design audit procedures that are appropriate in the circumstances.” In the case of
footnote 3, this may read: “In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation of consolidated financial statements that give a true and fair view in order to design audit procedures that are
appropriate in the circumstances.”9
ISA 705 (Revised), Modifications to the Opinion in the Independent Auditor’s Report
CONFORMING AMENDMENTS TO OTHER ISAs
…
Prior Period Financial Statements Not Audited
19.
If the prior period financial statements were not audited, the auditor shall state in an Other Matter
paragraph that the comparative financial statements are unaudited. Such a statement does not,
however, relieve the auditor of the requirement to obtain sufficient appropriate audit evidence that
the opening balances do not contain misstatements that materially affect the current period’s
financial statements. (Ref: Para. A12)
***
Application and Other Explanatory Material
Auditor Reporting
Corresponding Figures
Prior Period Financial Statements Not Audited (Ref: Para. 14)
A7a. If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening
9
balances, the auditor is required by ISA 705 (Revised) to express a qualified opinion or disclaim an
opinion on the financial statements, as appropriate, in accordance with ISA 705 (Revised). If the
auditor encountered significant difficulty in obtaining sufficient appropriate audit evidence that the
opening balances do not contain misstatements that materially affect the current period’s financial
10
statements, the auditor may determine this to be a key audit matter in accordance with ISA 701.
…
Comparative Financial Statements
…
Prior Period Financial Statements Not Audited (Ref: Para. 19)
A12. If the auditor is unable to obtain sufficient appropriate audit evidence regarding the opening
balances, the auditor is required by ISA 705 (Revised) to express a qualified opinion or disclaim an
opinion on the financial statements, as appropriate, in accordance with ISA 705 (Revised). If the
auditor encountered significant difficulty in obtaining sufficient appropriate audit evidence that the
opening balances do not contain misstatements that materially affect the current period’s financial
statements, the auditor may determine this to be a key audit matter in accordance with ISA 701.
Appendix
Illustrations of Auditors’s Reports
Note: Throughout these illustrative auditor’s reports, the Opinion section has been positioned first in
accordance with ISA 700 (Revised), and the Basis for Opinion section is positioned immediately
9
ISA 705 (Revised), Modifications to the Opinion in the Independent Auditor’s Report
10
ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
CONFORMING AMENDMENTS TO OTHER ISAs
after the Opinion section. Also, the first and last sentence that was included in the extant auditor’s
responsibilities section is now subsumed as part of the new Basis for Opinion section.
Illustration 1 – Corresponding Figures (Ref: Para. A5)
For purposes of this Report illustrative auditor’s report, the following of the circumstances described in
paragraph 11(a), as follows are assumed:
•
Audit of a complete set of financial statements of an entity other than a listed entity using a fair
11
presentation framework. The audit is not a group audit (i.e., ISA 600 does not apply).
•
The financial statements are prepared by management of the entity in accordance with
International Financial Reporting Standards (IFRSs) (a general purpose framework).
•
The terms of the audit engagement reflect the description of management’s responsibility for the
12
financial statements in ISA 210.
•
The auditor’s report on the prior period, as previously issued, included a qualified opinion.
•
The matter giving rise to the modification is unresolved.
•
The effects or possible effects of the matter on the current period’s figures are material and
require a modification to the auditor’s opinion regarding the current period figures.
•
The relevant ethical requirements that apply to the audit are those of the jurisdiction.
•
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does
not exist related to events or conditions that may cast significant doubt on the entity’s ability to
13
continue as a going concern in accordance with ISA 570 (Revised).
•
The auditor is not required, and has otherwise not decided, to communicate key audit matters in
14
accordance with ISA 701.
•
Those responsible for oversight of the financial statements differ from those responsible for the
preparation of the financial statements.
•
In addition to the audit of the financial statements, the auditor has other reporting responsibilities
required under local law.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Report on the Audit of the Financial Statements 15
Qualified Opinion
11
ISA 600, Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors)
12
ISA 210, Agreeing the Terms of Audit Engagements
13
ISA 570 (Revised), Going Concern
14
ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report
15
The sub-title “Report on the Audit of the Financial Statements” is unnecessary in circumstances when the second sub-title
“Report on Other Legal and Regulatory Requirements” is not applicable.
CONFORMING AMENDMENTS TO OTHER ISAs
We have audited the accompanying financial statements of ABC Company (the Company), which comprise
the statement of financial position as at December 31, 20X1, and the statement of comprehensive income,
statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory information.
In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of
our report paragraph, the accompanying financial statements present fairly, in all material respects, (or
give a true and fair view of) the financial position of the ABC Company as at December 31, 20X1, and (of)
its financial performance and its cash flows for the year then ended in accordance with International
Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion
As discussed in Note X to the financial statements, no depreciation has been provided in the financial
statements, which constitutes a departure from International Financial Reporting Standards IFRSs. This is
the result of a decision taken by management at the start of the preceding financial year and caused us to
qualify our audit opinion on the financial statements relating to that year. Based on the straight-line method of
depreciation and annual rates of 5% for the building and 20% for the equipment, the loss for the year should
be increased by xxx in 20X1 and xxx in 20X0, property, plant and equipment should be reduced by
accumulated depreciation of xxx in 20X1 and xxx in 20X0, and the accumulated loss should be increased by
xxx in 20X1 and xxx in 20X0.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in [jurisdiction], and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.
16
Responsibilities of Management’s and Those Charged with Governance Responsibility for the
17
Consolidated Financial Statements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
Management is responsible for the preparation and fair presentation of these financial statements in
18
accordance with International Financial Reporting Standards, and for such internal control as
17
Or other term that is appropriate in the context of the legal framework in the particular jurisdiction
17
Throughout these illustrative auditor’s reports, the Or other terms management and those charged with governance may need
to be replaced by another term that is appropriate in the context of the legal framework in the particular jurisdiction.
18
Where management’s responsibility is to prepare financial statements that give a true and fair view, this may read:
“Management is responsible for the preparation of financial statements that give a true and fair view in accordance with
International Financial Reporting Standards, and for such ...” 19 In the case of footnote 4, this may read: “In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true
and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control.”
CONFORMING AMENDMENTS TO OTHER ISAs
management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
Auditor’s Responsibility Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
19
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
20
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with ISA 700 (Revised) – see illustration 1 in ISA 700 (Revised).]
[Form and content of this section of the auditor’s report will vary depending on the nature of the auditor’s
other reporting responsibilities.]
19
In the case of footnote 4, this may read: “In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control.”
20
In circumstances when the auditor also has responsibility to express an opinion on the effectiveness of internal control in
conjunction with the audit of the financial statements, this sentence would be worded as follows: “In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances.” In the case of footnote 4, this may
read: “In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.”21
The sub-title “Report on the Audit of the Financial Statements” is unnecessary in circumstances when the second sub-title
“Report on Other Legal and Regulatory Requirements” is not applicable.
CONFORMING AMENDMENTS TO OTHER ISAs
[Auditor’s sSignature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor’s aAddress]
[Date of the auditor’s report]
CONFORMING AMENDMENTS TO OTHER ISAs
Illustration 2 – Corresponding Figures (Ref: Para. A5)
For purposes of this Report illustrative auditor’s report the following of the circumstances described in
paragraph 11(b) as follows are assumed:
•
Audit of a complete set of financial statements of an entity other than a listed entity using a fair
presentation framework. The audit is not a group audit (i.e., ISA 600 does not apply).
•
The financial statements are prepared by management of the entity in accordance with IFRSs (a
general purpose framework).
•
The terms of the audit engagement reflect the description of management’s responsibility for the
financial statements in ISA 210.
•
The auditor’s report on the prior period, as previously issued, included a qualified opinion.
•
The matter giving rise to the modification is unresolved.
•
The effects or possible effects of the matter on the current period’s figures are immaterial but
require a modification to the auditor’s opinion because of the effects or possible effects of the
unresolved matter on the comparability of the current period’s figures and the corresponding
figures.
•
The relevant ethical requirements that apply to the audit are those of the jurisdiction.
•
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does
not exist related to events or conditions that may cast significant doubt on the entity’s ability to
continue as a going concern in accordance with ISA 570 (Revised).
•
The auditor is not required, and has otherwise has not decided, to communicate key audit matters in
accordance with ISA 701.
•
Those responsible for oversight of the financial statements differ from those responsible for the
preparation of the financial statements.
•
In addition to the audit of the financial statements, the auditor has other reporting responsibilities
required under local law.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Report on the Audit of the Financial Statements 21
Qualified Opinion
We have audited the accompanying financial statements of ABC Company
comprise the statement of financial position as at December 31, 20X1,
comprehensive income, statement of changes in equity and statement of cash
ended, and notes to the financial statements, including a summary of significant
other explanatory information.
21
(the Company), which
and the statement of
flows for the year then
accounting policies and
The sub-title “Report on the Audit of the Financial Statements” is unnecessary in circumstances when the second sub-title
“Report on Other Legal and Regulatory Requirements” is not applicable.
CONFORMING AMENDMENTS TO OTHER ISAs
In our opinion, except for the possible effects on the corresponding figures of the matter described in the
Basis for Qualified Opinion section of our report paragraph, the accompanying financial statements
present fairly, in all material respects, (or give a true and fair view of) the financial position of the ABC
Company as at December 31, 20X1, and (of) its financial performance and its cash flows for the year then
ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion
Because we were appointed auditors of the ABC Company during 20X0, we were not able to observe the
counting of the physical inventories at the beginning of that period or satisfy ourselves concerning those
inventory quantities by alternative means. Since opening inventories affect the determination of the
results of operations, we were unable to determine whether adjustments to the results of operations and
opening retained earnings might be necessary for 20X0. Our audit opinion on the financial statements for
the period ended December 31, 20X0 was modified accordingly. Our opinion on the current period’s
financial statements is also modified because of the possible effect of this matter on the comparability of
the current period’s figures and the corresponding figures.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in [jurisdiction], and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.
Responsibilities of Management’s
23
Financial Statements
22
and Those Charged with Governance Responsibility for the
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
Management is responsible for the preparation and fair presentation of these financial statements in
24
accordance with International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
Auditor’s Responsibility Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards require
23
Or other terms that is are appropriate in the context of the legal framework in the particular jurisdiction
24
Where management’s responsibility is to prepare financial statements that give a true and fair view, this may read:
“Management is responsible for the preparation of financial statements that give a true and fair view in accordance with
International Financial Reporting Standards, and for such ...” 25 In the case of footnote 4, this may read: “In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true
and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control.”
CONFORMING AMENDMENTS TO OTHER ISAs
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
25
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
26
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
[Form and content of this section of the auditor’s report will vary depending on the nature of the auditor’s
other reporting responsibilities.]
[Auditor’s sSignature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor’s aAddress]
[Date of the auditor’s report]
25
In the case of footnote 4, this may read: “In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control.”
26
In circumstances when the auditor also has responsibility to express an opinion on the effectiveness of internal control in
conjunction with the audit of the financial statements, this sentence would be worded as follows: “In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances.” In the case of footnote 4, this may
read: “In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.”27
The sub-title “Report on the Audit of the Financial Statements” is unnecessary in circumstances when the second sub-title
“Report on Other Legal and Regulatory Requirements” is not applicable.
CONFORMING AMENDMENTS TO OTHER ISAs
Illustration 3 – Corresponding Figures (Ref: Para. A7)
For purposes of this Report illustrative auditor's report the following of the circumstances described in
paragraph 13, as follows are assumed:
•
Audit of a complete set of financial statements of an entity other than a listed entity using a fair
presentation framework. The audit is not a group audit (i.e., ISA 600 does not apply).
•
The financial statements are prepared by management of the entity in accordance with IFRSs (a
general purpose framework).
•
The terms of the audit engagement reflect the description of management’s responsibility for the
financial statements in ISA 210.
•
The auditor has concluded an unmodified (i.e., “clean”) opinion is appropriate based on the audit
evidence obtained.
•
The relevant ethical requirements that apply to the audit are those of the jurisdiction.
•
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does
not exist related to events or conditions that may cast significant doubt on the entity’s ability to
continue as a going concern in accordance with ISA 570 (Revised).
•
The auditor is not required, and has otherwise has not decided, to communicate key audit matters in
accordance with ISA 701.
•
Corresponding figures are presented, and tThe prior period’s financial statements were audited
by a predecessor auditor.
•
The auditor is not prohibited by law or regulation from referring to the predecessor auditor’s
report on the corresponding figures and has decided to do so.
•
Those responsible for oversight of the financial statements differ from those responsible for the
preparation of the financial statements.
•
In addition to the audit of the financial statements, the auditor has other reporting responsibilities
required under local law.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Report on the Audit of the Financial Statements 27
Opinion
We have audited the accompanying financial statements of ABC Company (the Company), which
comprise the statement of financial position as at December 31, 20X1, and the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting and other
explanatory information.
27
The sub-title “Report on the Audit of the Financial Statements” is unnecessary in circumstances when the second sub-title
“Report on Other Legal and Regulatory Requirements” is not applicable.
CONFORMING AMENDMENTS TO OTHER ISAs
In our opinion, the accompanying financial statements present fairly, in all material respects, (or give a
true and fair view of) the financial position of the ABC Company as at December 31, 20X1, and (of) its
financial performance and its cash flows for the year then ended in accordance with International
Financial Reporting Standards (IFRSs).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in [jurisdiction], and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Other Matter
The financial statements of the ABC Company for the year ended December 31, 20X0, were audited by
another auditor who expressed an unmodified opinion on those statements on March 31, 20X1.
Responsibilities of Management’s
29
Financial Statements
28
and Those Charged with Governance Responsibility for the
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
Management is responsible for the preparation and fair presentation of these financial statements in
30
accordance with International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
Auditor’s Responsibility Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
29
Or other term that is appropriate in the context of the legal framework in the particular jurisdiction
29
Or other terms that is are appropriate in the context of the legal framework in the particular jurisdiction
30
Where management’s responsibility is to prepare financial statements that give a true and fair view, this may read:
“Management is responsible for the preparation of financial statements that give a true and fair view in accordance with
International Financial Reporting Standards, and for such ...” 31 In the case of footnote 4, this may read: “In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true
and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control.”
CONFORMING AMENDMENTS TO OTHER ISAs
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
31
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
32
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
[Form and content of this section of the auditor’s report will vary depending on the nature of the auditor’s
other reporting responsibilities.]
[Auditor’s sSignature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor’s aAddress]
[Date of the auditor’s report]
31
In the case of footnote 4, this may read: “In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control.”
32
In circumstances when the auditor also has responsibility to express an opinion on the effectiveness of internal control in
conjunction with the audit of the financial statements, this sentence would be worded as follows: “In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances.” In the case of footnote 4, this may
read: “In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.”33
The sub-title “Report on the Audit of the Financial Statements” is unnecessary in circumstances when the second sub-title
“Report on Other Legal and Regulatory Requirements” is not applicable.
CONFORMING AMENDMENTS TO OTHER ISAs
Illustration 4 – Comparative Financial Statements (Ref: Para. A9)
For purposes of this Report illustrative auditor’s report of the following circumstances described in
paragraph 15, as follows are assumed:
•
Audit of a complete set of financial statements of an entity other than a listed entity using a fair
presentation framework. The audit is not a group audit (i.e., ISA 600 does not apply).
•
The financial statements are prepared by management of the entity in accordance with IFRSs (a
general purpose framework).
•
The terms of the audit engagement reflect the description of management’s responsibility for the
financial statements in ISA 210.
•
The Aauditor is required to report on both the current period financial statements and the prior
period financial statements in connection with the current year’s audit.
•
The auditor’s report on the prior period, as previously issued, included a qualified opinion.
•
The matter giving rise to the modification is unresolved.
•
The effects or possible effects of the matter on the current period’s figures are material to both the
current period financial statements and prior period financial statements and require a
modification to the auditor’s opinion.
•
The relevant ethical requirements that apply to the audit are those of the jurisdiction.
•
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty does
not exist related to events or conditions that may cast significant doubt on the entity’s ability to
continue as a going concern in accordance with ISA 570 (Revised).
•
The auditor is not required, and has otherwise has not decided, to communicate key audit matters in
accordance with ISA 701.
•
Those responsible for oversight of the financial statements differ from those responsible for the
preparation of the financial statements.
•
In addition to the audit of the financial statements, the auditor has other reporting responsibilities
required under local law.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of ABC Company [or Other Appropriate Addressee]
Report on the Audit of the Financial Statements 33
Qualified Opinion
We have audited the accompanying financial statements of ABC Company (the Company), which
comprise the statements of financial position as at December 31, 20X1 and 20X0, and the statements of
comprehensive income, statements of changes in equity and statements of cash flows for the years then
33
The sub-title “Report on the Audit of the Financial Statements” is unnecessary in circumstances when the second sub-title
“Report on Other Legal and Regulatory Requirements” is not applicable.
CONFORMING AMENDMENTS TO OTHER ISAs
ended, and notes to the financial statements, including a summary of significant accounting policies and
other explanatory information.
In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our
report, the accompanying financial statements present fairly, in all material respects, (or give a true and fair
view of) the financial position of the Company as at December 31, 20X1 and 20X0 and (of) its financial
performance and its cash flows for the years then ended in accordance with International Financial
Reporting Standards (IFRSs).
Basis for Qualified Opinion
As discussed in Note X to the financial statements, no depreciation has been provided in the financial
statements, which constitutes a departure from International Financial Reporting Standards IFRSs. Based
on the straight-line method of depreciation and annual rates of 5% for the building and 20% for the
equipment, the loss for the year should be increased by xxx in 20X1 and xxx in 20X0, property, plant and
equipment should be reduced by accumulated depreciation of xxx in 20X1 and xxx in 20X0, and the
accumulated loss should be increased by xxx in 20X1 and xxx in 20X0.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in [jurisdiction], and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.
Responsibilities of Management’s
35
Financial Statements
34
and Those Charged with Governance Responsibility for the
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
Management is responsible for the preparation and fair presentation of these financial statements in
36
accordance with International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
Auditor’s Responsibility Responsibilities for the Audit of the Financial Statements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
35
Or other term that is appropriate in the context of the legal framework in the particular jurisdiction
35
Or other terms that is are appropriate in the context of the legal framework in the particular jurisdiction
36
Where management’s responsibility is to prepare financial statements that give a true and fair view, this may read:
“Management is responsible for the preparation of financial statements that give a true and fair view in accordance with
International Financial Reporting Standards, and for such ...” 37 In the case of footnote 4, this may read: “In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true
and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control.”
CONFORMING AMENDMENTS TO OTHER ISAs
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
37
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
38
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.
Report on Other Legal and Regulatory Requirements
[Reporting in accordance with ISA 700 (Revised) – see Illustration 1 in ISA 700 (Revised).]
[Form and content of this section of the auditor’s report will vary depending on the nature of the auditor’s
other reporting responsibilities.]
[Auditor’s sSignature in the name of the audit firm, the personal name of the auditor, or both, as
appropriate for the particular jurisdiction]
[Auditor’s aAddress]
[Date of the auditor’s report]
37
In the case of footnote 4, this may read: “In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control.”
38
In circumstances when the auditor also has responsibility to express an opinion on the effectiveness of internal control in
conjunction with the audit of the financial statements, this sentence would be worded as follows: “In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances.” In the case of footnote 4, this may
read: “In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.”